By Casey Sullivan
Sept 10 (Reuters) - HSBC Bank USA, N.A., has sued Atlanta
law firm Troutman Sanders in connection with the firm's alleged
role in a loan the bank made to a prominent political fundraiser
who was later convicted for bank fraud.
In its 15-page lawsuit, filed Sept. 7 in New York State Supreme Court, HSBC claimed former Troutman Sanders lawyer
Robert Chanis was negligent and breached a fiduciary duty to
HSBC when he advised the bank on a $100 million
securities-backed loan to Hassan Nemazee.
Nemazee, once a wealthy businessman and a political
fundraiser for President Barack Obama, Hillary Clinton and other
Democrats, is serving a 12-year federal prison sentence after
pleading guilty in 2010 to stealing as much as $292 million from
HSBC, Citigroup Inc and Bank of America Corp. The son of a
shipping magnate, Nemazee ran Nemazee Capital, a holding company
with investments in private and public companies.
HSBC said in its lawsuit that Chanis failed to fully
investigate the securities Nemazee offered HSBC in the loan
transaction. The securities -- supposedly $89 million in
treasury bills, at a market value of $115 million, held in two
accounts at brokerage firm Pershing -- were later found to be
fake. Moreover, the loan agreement was filled with forged
signatures and fake addresses and telephone numbers of Nemazee's
account managers, according to court records and media accounts.
As a result, HSBC said in its lawsuit, the bank was left on
the hook when Nemazee allegedly stole $74.9 million of the loan
money. That's the amount HSBC is seeking from Troutman Sanders.
Chanis, who left Troutman Sanders in 2010 to work at New
York law firm Harris Beach, did not respond to a request for
comment. A Harris Beach spokesman did not return a request for
Troutman Sanders is being represented in the litigation by
Edward Friedman of Friedman Kaplan Seiler & Adelman. Friedman
said in an interview that evidence will eventually show that
HSBC's allegations "misrepresent what happened" in the course of
the loan transaction.
"We believe the responsibility for this lending decision
rested solely with HSBC," Friedman said, "and that any losses
incurred by HSBC were caused by the fraud by Hassan Nemazee and
the bank's own failure to protect its own interest."
HSBC claims in its lawsuit that Chanis failed to notify HSBC
when he became aware of several discrepancies in Nemazee's
accounts that signaled they could be fake.
Referring to a transcribed telephone conversation, HSBC
claims that Chanis was told by his personal assistant that a
Pershing advisor who was supposed to sign the HSBC loan
transaction with Nemazee on Pershing's behalf didn't actually
work at Pershing. Chanis did not notify HSBC about this red
flag, the lawsuit claims.
"Had Troutman or Chanis done further investigation," the
lawsuit said, "they would have discovered that Nemazee did not
have a securities account at Pershing LLC and did not own any of
the treasury bills that he had pledged as collateral for the
The case is: HSBC Bank USA, N.A. v. Troutman Sanders and
Robert Chanis, New York State Supreme Court, No. 653139/2012.
For plaintiff: Lita Beth Wright, Storch Amini & Munves.
For defendants: Edward Friedman, Friedman Kaplan Seiler &
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